ABSTRACT
Sustainable management of water, land and ecosystems (WLE) is a central facet of human well-being and environmental security (Hanjra et al., 2009; Namara et al., 2010). This also intersects with an increasing emphasis on global food security and the failure of world governments to stem the degradation of natural resources, global bio-diversity loss and protection of natural and pristine environments, and their unique role in providing food and invaluable services to mankind. Marketbased instruments (MBIs) are the policy tools that can influence human behaviour through market signals and incentives rather than through explicit directives and regulations (Whitten and Young, 2003). They are becoming more popular because of their greater flexibility, effectiveness and efficiency (Whitten et al., 2003) in improving natural resource management for food security and livelihoods. In fact, they are particularly useful where regulatory approaches do not work well to arrest on-going degradation of natural resources. There are two notable examples of MBIs in use in rural agricultural settings
around the world: the Conservation Reserve Program (CRP) in the United States, which is the world’s largest voluntary land conservation programme, and the Payments for Environmental Services (PES) programme of Costa Rica. Since its commencement in 1986, the US government has paid some US$32.23 billion in support of the CRP programme (FSA, 2007). At the end of 2006, the programme had some 14.6 million ha of land under contract (FSA, 2007), with significant socio-economic (Leistritz et al., 2002; Yang et al., 2005) and environmental benefits (Mapemba et al., 2007; Ribaudo, 1989). Similarly, since its commencement in 1997 the PES programme has involved some 532,000 ha or about 10 per cent of the total area of Costa Rica (FONAFIFO, 2007), and the programme has significant benefits in bio-diversity conservation and cost efficiency (Barton et al., 2009; Zbinden and Lee, 2005). The MBIs are implemented in a suite of settings around the world but
their application in rural settings is still in its early stages. Some key MBIs projects in rural settings in Australia were implemented under Round One of the
National MBIs Pilot Project under the National Action Plan. The Pilot Project had 11 pilots involving various MBI models targeting salinity, water quality and bio-diversity management. After their initial success in generating considerable interest (Whitten et al., 2003; Whitten and Young, 2003; Bryan et al., 2005; Coggan et al., 2005; Coggan and Whitten, 2005), the Australian Federal Government embarked on Round Two of the initiative, which involved funding another nine projects between November 2006 and June 2008 (Australian Government, 2007a). Application of MBIs is based on the premise that these instruments offer the
potential to achieve efficiency gains over more traditional regulatory instruments. While MBIs have shown considerable potential in Australia’s rural setting, achieving potential gains would require the overcoming of a range of obstacles including: aligning instruments and policy options; concurrent or prior removal of perverse incentives; addressing diffuse, or non-point source, pollution problems; and ensuring that instruments are performance based rather than overly prescriptive (Whitten et al., 2003). Often these obstacles are significant limitations to the potential efficiency gains. Yet well-designed programmes offer opportunities for application in rural settings for improved natural resources management, including that at the intersection of water, land, food production and ecosystem services. For instance, Chapter 5 (Lin and Thornton, this volume) presents a more integrated perspective on payments for ecosystem services through a governance path from lakes and rivers to coastal areas in China. The aim of this study is to identify and evaluate key obstacles for improving the
effectiveness of MBI programmes by analysing one case example from an Australian rural setting. The MBIs model selected is a simple model that was used for the Stewardship Scheme for Grazing Land Management in the Condamine Catchment of Queensland. The case example was selected against the backdrop of years of land clearing and
intensification of farming systems in the upper catchments in Queensland, Australia, and the inflow of nutrients and pesticides into the natural waterways which ultimately drain into the sea and affect the water quality, vitality and resilience of the iconic and World Heritage listed Great Barrier Reef ecosystem. For instance, regional land use, flooding, enriched runoff, pesticides and fertilizer residues affect water quality (Haynes and Michalek-Wagner, 2000; McKergow et al., 2005; Wooldridge et al., 2006; Wooldridge, 2009; Furnas et al., 2011; Schaffelke et al., 2012; Smith et al., 2012; King et al., 2013) and cause, among other things, coral bleaching, which affects fish survival and productivity and associated economic value for the local coastal communities as well as the visitors and ultimately the tourism industry and revenue from a national icon (Rolfe and Windle, 2011a, 2012). For instance, estimated beach recreation values along 1400 km of coastline for a single beach visit per person are about $37 and the values for beach recreation in the region are about $616million per annum (Rolfe andGregg, 2012). Climate change and lack of a framework for adaptive management and a reporting programme pose further risks and challenges to this World Heritage Area (Bohensky et al., 2011; Dobbs et al., 2011), and there is limited empirical evidence
on adapting auctions for the provision of ecosystem services and comparing the best management practice scorecard to select proposals for water quality improvement through competitive bids (Reeson et al., 2011; Rolfe and Windle, 2011b). This study contributes to that literature.
